U.S. Maritime Policy Needs an Overhaul

by Colin Grabow, Cato Institute, War on the Rocks, September 6, 2024 (excerpt)

…Although numerous metrics demonstrate the maritime industry’s descent into mediocrity, few capture it more starkly than the state of commercial shipbuilding. Despite American manufacturing and technological prowess, U.S. shipyards’ output in recent years has ranked just 15th in the world. So gross is the industry’s lack of competitiveness — building ships for four or more times the average world price — and so paltry is the demand for its offerings that the sector’s collective output amounts to just a fraction of one percent of the global total.

Not only a far cry from the dominant shipbuilding triumvirate of China, Japan, and South Korea, U.S. numbers also trail the likes of much smaller players such as Finland, the Netherlands, and Norway.

A requirement that vessels used in intra-U.S. waterborne commerce be domestically constructed — mandated by the 1920 Jones Act — means that this shipbuilding inefficiency poisons American shipping. Burdened by excess capital costs, the competitiveness of water transport is such that despite numerous geographical factors tilting in its favor — including a vast coastline home to 40 percent of the U.S. population, expansive inland waterways, the Great Lakes, and shipping-dependent non-contiguous states and territories — the mode accounted for less than 4 percent of freight moved last year. Water transport has deteriorated into almost niche status and what should be a key asset providing efficient transportation across the country’s vast expanse goes woefully underutilized.

This has consequences for the broader U.S. economy, including some of the country’s most strategic industries. Thanks to pricey (or in some cases, non-existent) shipping, U.S. refineries purchase oil from abroad instead of the Gulf Coast, Puerto Rico meets its bulk liquefied gas needs from distant Nigeria and other sources instead of the U.S. mainland, and steel is imported instead of purchased domestically. The competitiveness of American firms is undermined and the viability of domestic supply chains is shattered.

Frustratingly, these are but a small sampling of the costs incurred….

read … U.S. Maritime Policy Needs an Overhaul - War on the Rocks

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